J.P. Morgan Asset Management is investing $110 million or around Rs 500 crore in Hyderabad-based Soma Group, which is involved in construction and development of infrastructure projects in the transportation, hydel power and water resource sectors.
J.P. Morgan, which raised an $860 million Asian infrastructure fund last year, will invest in the company in two tranches, . SRGR Law Offices advised Soma while Amarchand & Mangaldas advised JP Morgan, the report has stated, quoting one of the legal partners involved in the deal.
E-mail queries and phone calls to reach out to Soma Group and J.P. Morgan spokesperson did not elicit any response till the time of posting this story.
Although the specifics of the investment cannot be determined, it may have been done for the funding of Soma’s highway projects unit, which holds its portfolio of BOT (build, operate, transfer) projects in the highways and road sector. Earlier reports had stated that the firm was looking to raise fund for Soma Highway (Toll) Projects Pvt Ltd.
Soma is currently executing nine national highway projects under different Special Purpose Vehicles (SPVs).
Soma Enterprises Ltd, the group’s flagship, is promoted by Rajendra Prasad Maganti and it raised Rs 191 crore from 3i Infrastructure Fund in November 2007. The company started out with irrigation projects and further expanded into areas like tunnelling, roads and hydropower. The company is currently executing projects in various states including Andhra Pradesh, Maharashtra, Tamil Nadu, Punjab, Kerala and Assam.
There have been a slew of big private equity deals in the Indian roads and highways space as investors look to tap the upcoming infra opportunities. India may require $1.7 trillion in the decade starting from 2010, to meet the country’s overall infrastructure demand and keep pace with the economic growth and urbanisation, a report by Goldman Sachs has stated. Of this, power and roads alone may require upwards of $700 billion.
Most recently, HCC Concessions Ltd (which has six NHAI concessions) diluted 14.5 per cent stake to US-based investment firm Xander Group for Rs 240 crore.
Morgan Stanley Infrastructure Partners and Isolux Corsán Concesiones have announced an investment of $200 million each for developing highways in India under long-term concession agreements, awarded through the Build-Operate-Transfer (BOT) programme of NHAI. Private equity major 3i Group has also invested $111.51 million in KMC Infratech Ltd, a subsidiary of KMC Constructions involved in BOT projects in the roads and highways sector.
Other major investments in this space have been in Nandi Infrastructure Corridor Enterprises Ltd (JPMorgan) and Tata Realty & Infrastructure (Actis).